Allowances for homeworking
If your employees are required to work from home, even on a part-time basis, you can pay them a tax-free allowance of £6 per week.
This allowance is designed to compensate for additional electricity, gas or water consumed while working at home. Where the employee uses their own telephone for business, you can also reimburse them for the cost of the business calls made. We can help you put this allowance through your payroll.
If you decide not to pay your employee the tax-free working from home allowance, they may be able to claim a tax deduction of £6 per week from HMRC, if they don’t have a choice about working at home. This deduction can be claimed here.
Employees who claimed the working at home tax deduction for the tax year 2020/21 and are still working at home can make another claim now for the tax year 2021/22.
The working at home tax deduction is worth £1.20 per week in cash terms for basic rate taxpayers and £2.40 per week for higher rate taxpayers, so less than the working from home allowance paid by employers.
